Flying into uncertainty: The shifting skies of ‘extraordinary circumstances’

Are courts continuing with a pro-consumer approach to airline compensation cases, or has there been a shift to a more pro-airline approach? In this article, Christopher Loxton and Nicole Pearson look at the recent updates on what constitutes “extraordinary circumstances” under article 5(3) of Regulation (EC) No. 2004/261 (‘the Regulation’).  In particular, they focus on three recent decisions relating to staff absence and aircraft defects: Lipton v BA Cityflyer [2024] UKSC 24, Matkustaja A v Finnair Oyj (C-385/23) and D. S.A. vs P. S.A (C-411/23).

The defence under article 5(3) of the Regulation excludes air carrier’s liability to pay compensation if they prove a flight cancellation, or arrival delay of 3 hours or more, is“caused by extraordinary circumstances which could not have been avoided even if all reasonable measures had been taken”.

Recital 14 provides examples as to what might be considered an “extraordinary circumstance”, citing “political instability”, “meteorological conditions incompatible with the operation of the flight concerned”, “security risks”, “unexpected flight safety shortcomings”, and “strikes that affect the operation of an operating air carrier”. Yet even within these examples, there is no automatic presumption that such circumstances are in fact extraordinary, and therefore the courts are required to make a case-by-case assessment, determining, per the CJEU in, Wallentin-Hermann, Case C-549/07 at [17]:

• whether the relevant event is inherent in the normal activity of the carrier (what Lord Lloyd-Jones at para 149 of Lipton called the “inherency” test), and
• whether the carrier has a requisite degree of control in relation to the occurrence of that event and its consequences.

While case law has previously suggested a general distinction between events whose origins are ‘internal’ (therefore, inherent), and those whose origin is ‘external’ to the operating air carrier, recent cases have suggested that even that distinction is fraught with exceptions and nuances.                                            

Staff Absences: Lipton v BA Cityflyer [2024] UKSC 24

The recent decision in Lipton v BA Cityflyer (‘Lipton’) is key reading for practitioners wishing to advise clients on their prospects of bringing or defending a compensation claim for flight cancellation/delay.

In finding that a pilot taken ill shortly before a flight departure did not constitute an extraordinary circumstance, the Supreme Court considered the following factors to be relevant:

• Extraordinary circumstances should be given ordinary meaning in everyday language, and interpreted as being outside the “mundane” [161] and [166];
• Staff illness is “commonplace” for any business and something which occurs on a “daily basis” [161];
• A pilot, because of his role, is “as much part of the operating system” as the mechanical components of the aircraft [165];
• Pilots are governed by rules outside of operating hours (for example, not being able to consume alcohol in the 24 hours before a flight), and it therefore does not matter that he or she fell ill off-duty [170];
• The purpose of the Regulation is to provide a standardised level of compensation, and therefore the vast bulk of claims ought to be able to be determined on paper [171]; and
• Excessive granular examination of fact is undesirable given the likely impracticalities and difficulty of doing so in the context of illness [172].

Following recent decisions narrowing the scope of staff absences due to industrial action, the Supreme Court’s decision appears to be a further stark warning to airlines that absence of staff is rarely likely be considered an extraordinary circumstance.

By appearing entirely disinterested in the reason of the illness [172], the Court appears to be confirming that the conclusion would have been the same even if the pilot’s absence had been wholly unpredictable. Similarly, although attention was draw to a pilot’s professional obligations in the 24 hours proceeding the flight [170], the Court made clear its view would not have changed had the illness occurred at any other time prior to the flight’s departure. In other words, whether a pilot is ill with a cold, or a rare tropical disease contracted on holiday, ought not, to make a difference. 

The Supreme Court’s decision chimed with a 2023 CJEU’s decision of TAP Portugal v Flightright GmbH (Joined Cases C-156/22 to C-158/22) [2023] Bus LR 875, in which a co-pilot tragically and unexpectedly passed away shortly before the flight’s departure. This event left the entire crew too shaken to operate the flight and a replacement crew has to be sourced.  Yet the CJEU held that the event was inherent in the normal exercise of the carrier’s activities.

It remains to be seen whether staff illness attributedly solely to a third party or external event, for example a crew member being given food poisoning through corporate espionage or by a disgruntled former employee, could be said to escape the confines of the Lipton and TAP Portugal v Flightright decisions.  In recent years, the CJEU has found seemingly commonplace circumstances to be extrodinary where they have an “external origin” and/or are attributable to the acts of a third party:- whether as a result of foreign object debris on a runway (as in Germanwings GmbH v Pauels (C-501/17)); the presence of petrol on a runway resulting in its closure (Moens v Ryanair (C 159/18, 26 June 2019); diversion of an aircraft as a result of an unruly passenger onboard (LE v Transport Aéreos Portugueses SA (C 74/19); the sudden and unexpected failure of an airport refuelling system (KU, OP, GC v SATA International – Azores Airlines SA ((C-308/21); or the lack of airport staff responsible for the loading of passenger baggage (Touristic Aviation Services Limited v Flightright GmbH (C-405/23).

Technical failures: Matkustaja A v Finnair Oyj (C-385/23) &  D. S.A. v P. S.A ( C-411/23)

The recent decisions in respect of technical failures equally raise their own set of dilemmas. In June 2024, the CJEU handed down two important decisions in relation to technical failures: Matkustaja A v Finnair (‘Finnair’), which involved a flight cancellation due to a technical failure as a result of a latent defect in design in what was described as  “the first worldwide occurrence in relation to the particular type of aircraft”, and D. S.A. vs P. S.A (‘D.S.A’), based on similar facts, but with the nuanced difference that the airline had be warned by of the defect before the flight’s departure.

In both instances, the CJEU found in favour of the carrier, placing particular emphasis on the fact the that the carrier had no power to identify and remedy the latent defect in design, and therefore could not be considered to have “exercised control” in the scenario (Finnair [34]).  The Court also confirmed that it did not matter at what time the link between the failure and hidden design defect is detected, as long as the defect existed at the time of the cancellation/delay of the flight (Finnair [37]) and the carrier had no means to correct it (D.S.A [40]).

In the judgments, the CJEU laid out the circumstances which must be present for a technical fault to be considered “extraordinary circumstances”:

• A third party confirms that a failure, both unexpected and unprecedented, was caused by a hidden manufacturing or design defect in a new model of aircraft (Finnair [30];)
• The failure affects all aircraft of the same type (Finnair [31]);
• That failure impinges on flight safety (Finnair [31]); and
• The carrier had no power to identify and remedy the latent defect in design (Finnair [34], S.A [40]).

Although on the face of it, Finnair and D.S.A appear to leave some hope for airlines facing technical difficulties, though in reality the threshold for counting such defects as “extraordinary” within the meaning of article 5(3) remains extremely high.  

However, the decision in D.S.A leaves open the question of whether there may be circumstances, even when a hidden manufacturing defect is identified, where air carriers will consider to have had enough time to remedy the defect in design. Though it was noted by the CJEU that “reasonable” measures for the purpose of article 5(3) were not to be interpreted in this context as requiring a back-up fleet of aircraft on standby at short notice [47].

Interestingly, and in stark contrast to the Supreme Court’s aim of providing a standardised approach, and avoiding county courts embarking on detailed fact-finding exercises, the decision in D.S.A went so far as to urge national courts to take into account the commercial realities of airline operations [50] in deciding what measures were reasonable to take in the particular circumstances.  The decision therefore raises questions as to the extent to which such an approach would be followed in UK courts moving forward.

Key Takeaways

Despite the number of additional questions raised, practitioners should bear the following key points in mind in relation to extraordinary circumstances:

• Although there may be some limited scope in situations where staff illness was caused by an identifiable third-party, as a general rule, staff illness falls outside the scope of “extraordinary circumstances”;
• The timing of when the staff member fell ill is unlikely to ever be relevant;
• Aircraft defects generally remain firmly within the scope of “ordinary” circumstances;
• Airlines face a high bar to proving a design defect constitutes an extraordinary circumstance, requiring the defect to be proven, hidden, widespread (affecting all aircraft of the same type), and serious;
• The burden is on the carrier to obtain the required confirmation from the manufacturer or other third-party that the technical failure in question resulted from a model-wide defect.

Recent decisions have generally represented good news for claimants seeking compensation and bad news for airlines who continue to face challenging operating and regulatory conditions.

An additional ‘loser’ in the recent string of cases appears to be national courts. The decisions in Lipton, D.S.A and Finnair are difficult to reconcile. Whilst for technical defects, courts are urged to embark on a fact-finding exercise as to the cause of the defects and the realities of a carrier’s operations, Lipton confirmed that such exercised must not be carried out for employee absences, a distinction which seems all the more arbitrary given the equivalence repeatedly drawn between staff members and technical parts themselves. Whether courts in the UK will refrain or engage in detailed fact-finding exercises in light of Lipton remains uncertain.  What is certain, however, is the journey towards consistency and uniformity remains a long and winding one.